IBI-Rating has affirmed the credit rating and the rating of investment attractiveness of Cherkasy city

National rating agency IBI-Rating informs on affirming of the credit rating of Cherkasy city at uaА- grade with outlook revision from «negative» to «evolving» and keeping the credit rating on the CreditWatch list, as well as affirming the rating of investment attractiveness at invA- grade.

Such rating grades reflect the city's high ability to pay off its debt obligations and high investment attractiveness. The notation «-» indicates an intermediate rating category relative to the main category. The «evolving» outlook indicates a high probability of a change in the credit rating during the year. Being on the CreditWatch list is due to the deterioration of the business environment and increased uncertainty about the prospects for economic development amid ongoing military operations in Ukraine caused by aggression of the Russian Federation. However, given the continued positive dynamics of the community's own budget revenues, despite the ongoing martial law, the negative outlook was changed to «evolving» outlook.

Were taken into account:

1. Indicators of socio-economic development
Cherkasy city has a diversified economy and a powerful industrial complex. The backbone of the industry is formed by chemical, food and machine building enterprises. More than 200 industrial enterprises operate in the city. A number of indicators characterizing the state of the city's economy per capita exceed the corresponding indicators for the country as a whole. The structure of the industrial complex of Cherkasy city is mainly focused on the domestic market.
Cherkasy industrial enterprises are actively implementing investment projects aimed at their modernization. Small businesses are having a growing impact on the city's economic development. Despite the martial law the number of entrepreneurs is increasing. Thus, according to the State Tax Service in Cherkasy region, the number of registered individual entrepreneurs in Cherkasy city as of January 01, 2022 was 20 186, and as of January 01, 2023 – 20 497.

2. Effectiveness of financial policy sensitivity of the budget to negative factors
In 2022, the budget of Cherkasy CTC received UAH 4,343.1 million (which is 32.2% more than the income received in 2021). Despite the hostilities, the community's own revenues in 2022 increased by 49.12% (+UAH 268.04 million) compared to period of 2021, and their share in total revenues increased by 10.05 percentage points. The budget of the Cherkasy City Territorial Community for 2022 was executed with revenues in the amount of UAH 4,343,103.1 thousand, or 101.3% of the annual plan, and expenditures in the amount of UAH 3,829,434.7 thousand, or 87.8% of the annual plan. The budget of Cherkasy city is characterized by a sufficient level of liquidity. According to the results of the budget implementation in 2022, the ratio of general fund balances to general fund expenditures was 21.64% (against 4.16% in 2021). For the special fund, the liquidity ratio was 3.48% (against 3.27% in 2021). The total liquidity ratio as of January 01, 2023 amounted to 16.66% (against 3.96% as of January 01, 2022).
The fiscal capacity of the Cherkasy CTC budget (personal income tax per capita) is higher than the national average, which is why the horizontal equalization mechanism is applied to it - funds are transferred to the state budget in the form of a reverse subsidy. The amount of the reverse subsidy in 2022 amounted to UAH 15.63 million (against UAH 105.64 million in 2021). The amount of budget revenues (excluding transfers) per capita in Cherkasy CTC in 2022 is UAH 7.49 thousand. In 2022, the community budget was executed with a surplus of UAH 511,613.5 thousand (against a surplus of UAH 105,146.5 thousand in 2021).
The debt burden is moderate: as of 01.01.2023, the consolidated debt of the city council amounted to 15.36% of the community's budget revenues for 2022. The amount of direct debt consists only of the balance of debt to the state budget on medium-term and interest-free loans received at the expense of the single treasury account in 2009-2013 in the total amount of UAH 106,216.1 thousand.

3. Investment potential of the city
Cherkasy city is a regional center, the regional center of Central Ukraine, and the industrial center of the Central Economic Region. Cherkasy region's position on the Dnipro River plays an important role in shaping the economy. The city is located at the intersection of important national transportation routes: water, road, and rail, which gives it the prospect of creating a powerful logistics center.
Cherkasy has a well-developed engineering and transport infrastructure, and the local authorities are making significant efforts to improve it, including through the implementation of investment projects involving foreign investment. Significant attention is paid to improving energy efficiency. The city also has a high-quality trade, financial and business infrastructure. Cherkasy city has 11 modern shopping and entertainment centers with a total area of 14,040 square meters. For conferences, seminars, trainings, presentations, meetings, business meetings and cultural events, a number of hotels in the city offer comfortable conference rooms equipped with modern facilities. There are 87 branches of 27 banking institutions.
The city's advantage is its strong human resource potential. At the same time, business competition and labor costs are lower compared to the capital. The city council has experience in successfully implementing investment projects, including those with the participation of foreign donors. The projects cover the following areas: modernization of heat supply, water supply, drainage and sewerage systems, waste management, modernization of energy networks and thermal modernization, etc.

4. Business environment and investment policy of local authorities
Most of the local taxes and fees in Cherkasy are lower than the maximum rates stipulated by the Tax Code, which creates favorable conditions for business development. In order to increase opportunities for the development of local entrepreneurship and investment attraction, Cherkasy City Council is implementing the Program for Promoting Investment Attraction and Entrepreneurship Development in Cherkasy city for 2022-2026. The program's activities include promoting the city's potential, assisting business entities in promoting their products and services, and providing organizational, informational, and consulting support to business entities.
Since 2017, the Regional Development Agency has been actively operating in Cherkasy city, providing services to help Cherkasy region enterprises enter foreign markets. These services include translation, organization and negotiation, promotion of investment projects, business training, etc. In addition, there are a number of organizations in Cherkasy city that provide various support to existing businesses and start-ups. In 2016, the Business Innovation Center of Bohdan Khmelnytsky Cherkasy National University was established as a separate structural unit of the university on the basis of the State Enterprise Cherkasy State Center for Science, Innovation and Informatization to support innovation. As a part of the state program for the strategic development of Ukraine and its regions, a number of cluster associations have been created in Cherkasy region.

In order to conduct the analytical research the materials obtained from Cherkasy city have been used, including: indicators of the city's social and economic development, statistical data, treasury statements, program materials, other necessary internal information, as well as the information from the public sources, which the Rating agency considers credible.

Municipal Department
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